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Four challenges for Commvault's new CEO

Bob Hammer is on his way out after 20 years at the storage vendor. His replacement Sanjay Mirchandani has just been announced

After two decades in charge, Commvault's Bob Hammer is making way for former Puppet chief Sanjay Mirchandani as the back-up and recovery vendor's new CEO.

Hammer will become chairman emeritus with Nick Adamo taking over as chairman of the board in April.

His departure from both roles was precipitated by several years of disappointing profit margins for Commvault, which caused its activist shareholder Elliot Management to agitate for "an overhaul".

With the weight of a 10.3 per cent stake, in April last year, the PE firm published a highly critical public letter in which it lamented Commvault's inefficiency as "an extreme outlier in the industry", and demanded changes to the board.

A month later, Hammer issued a statement saying he had agreed to step aside

CPI spoke to his replacement this week to get his take on what his leadership will mean for Commvault.

Here we outline four tasks that will likely be near the top of to-do list.

Justify why it took so long

Hammer was unceremoniously ousted in May, and Mirchandani said the vendor first approached him in October last year.

However, for partners and customers, there's been an eight-month wait for any certainty on Commvault's fresh leadership and direction.

Mirchandani said he recognised that his number-one priority is to meet as many partners as soon as possible, saying he's embarking on a global tour to get to speed with their concerns.

"This is the most important thing to me. I need to hear those voices to calibrate my early thinking around strategy," he said.

"I'm going to be on the road and I'll keep going until the airlines stop taking me…This is a company that has been in business for a while so I can immerse myself quickly."

His background has seen him be CIO for EMC as well as the CEO of software vendor Puppet.

"I've been in the industry as a CIO so I've lived the challenges that customers are going through…And more recently I have experience in multi-cloud and native environments," he said.

Manage the transition

In Elliot Management's public call for change last year, the PE firm warned that "minor fixes will not be sufficient. The skills and focus Commvault requires over the next five years must be profoundly different than those evidenced over the previous five."

However, Mirchandani initially made the case that his strategy will not mark a major deviation from Bob Hammer's leadership.

"Nothing is broken…The transition between Hammer and me is a very graceful and planned one….He will continue to be counsel to me. This isn't ripping a band aid and trying to figure out if things have healed. This is about making sure we systematically grow to the next level. We've got the technology."

However, when pressed, Mirchandani conceded that managing the transition in leadership will be one of his main challenges this year.

"There isn't a mad dash to try and change things," he said.

"I was hired by the search committee of the board of Commvault. There isn't a company in the world who doesn't think they can do better, and Commvault is no exception but I didn't come in here thinking I have a gun to my head to go and make 15 changes on day two."

Keep his shareholders happy

Mirchandani claims that he has yet to meet Elliot Management but that he will be "soon".

However, with the fact that his predecessor's coup was largely led by Elliot Management, it seems unlikely the PE firm will be taking a back seat any time soon.

Mirchandani is likely to face pressure from shareholders, especially on the matter of Commvault's profit margins.

In 2018, Commvault's operating profit margins were 10 per cent, versus 23 per cent five years ago.

Mirchandani was quick to point to Commvault's recent Q3 2019 results, in which the vendor logged $184m in revenues, up nine per cent sequentially and two per cent year over year.

"You can see that we're doing well…But that work is never done. Efficiencies and productivity are two things you can't stop going at. I'm very data focused and that is something that will continue to be our focus.

Fend off competition from emerging backup and recovery vendors

Last year, while Commvault was racked by board instability and cost saving cuts, its big competitor Rubrik hit the headlines with a series of flashy board appointments, in the form of former Cisco CEO John Chambers and Microsoft chairman John W. Thompson.

However, Mirchandani claims that emerging vendors in its space offer nothing that Commvault does not already have in its arsenal.

"I know this; I've lived this as a CIO," he said.

"Companies are constantly in a transition...And companies that give you one way to do something, one throat to choke, one set of innovations ahead to where you want to be, is what Commvault has done in its history…And that's absolutely what I'll continue to drive."

Speaking about his newer rivals, he added:

"I've seen cloud-based companies inside out. A company that was born in the cloud tends to only have one of anything: one data structure one programming model…

"I don't mean to be glib about it but having a cottage industry of tools that do point solutions is not the answer.

"Being able to have one way to solve a set of problems is the approach we've taken."